The U.S. Justice Dept. said yesterday that Sanford Health, Sanford Medical Center and Sanford Clinic of Sioux Falls, S.D., agreed to pay more than $20 million to resolve allegations that they submitted false claims to federal healthcare programs.
The allegations include violations of the Anti-Kickback Statute and medically unnecessary spinal surgeries, according to a statement from the Justice Dept. The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving payments to induce referrals of items or services covered by Medicare, Medicaid and other federally-funded programs.
The Justice Dept. said the settlement resolved allegations that Sanford knew one of its neurosurgeons was receiving kickbacks from his use of implantable devices from his physician-owned distributorship (POD).
Sanford allegedly received warnings from colleagues of the neurosurgeon that he was not only involved in a kickback scheme but also performing unnecessary procedures with the devices distributed by his POD. The Justice Dept. said that Sanford did not heed the warnings and continued to not only employ the neurosurgeon but allowed him to profit from the devices while using them in surgeries at Sanford and submitted claims to federal healthcare programs for the operations.
Sanford has entered into a Corporate Integrity Agreement with the Department of Health and Human Services Office of the Inspector General, meaning it will be required to maintain a compliance program, implement a risk assessment program and hire an independent review organization to review Medicare and Medicaid claims at the company.
The original allegations were brought forth in a lawsuit filed by Sanford surgeons Dr. Carl Bechtold and Dr. Bryan Wellman under the qui tam whistleblower provision of the False Claims Act. Bechtold and Wellman are set to receive $3.4 million from the settlement proceeds.
“Kickbacks can compromise a physician’s medical judgment, result in unnecessary procedures, and increase healthcare costs for everyone,” DOJ civil division assistant attorney general Jody Hunt said in prepared remarks. “We will continue to hold healthcare providers accountable when they violate the rules intended to safeguard the integrity of federal healthcare programs and the welfare of their beneficiaries.”
“Kickback schemes and other improper financial incentives create inherent conflicts of interest and warp the medical decision-making process,” added U.S. attorney for the District of South Dakota Ron Parsons. “This office will continue to aggressively pursue anyone who colludes to violate federal law and compromise the integrity of our healthcare system.”